Home / Saudi Telecom profit up on more subscribers

Saudi Telecom profit up on more subscribers

Second largest Arab telecom sees Q1 net income rise 11.4% to $808mn.

Saudi Telecom Company (STC) posted its biggest rise in profit in the first quarter in a year after the second-largest Arab telecom firm by market value added customers.

Net income in the three months to March 31 rose 11.4% to 3.03 billion riyals ($808 million), or 1.51 riyals per share, compared with 2.72 billion riyals, or 1.36 riyals per share, in the year-earlier period, STC said in a statement on the bourse website.

"It was due to an increase in revenue and growth in the mobile and broadband services, knowing that the number of customers grew 23%," STC said.

Analysts' forecasts for STC's first-quarter profit ranged from 2.75 billion to 3.23 billion riyals in a survey by newswire Reuters last month.

Operating revenue advanced 21% to 9.58 billion riyals after "readjustment of the comparative figures for 2007", STC said, without elaborating.

Shares of STC were down almost 23% to Saturday's close, compared with 13% for the main stock index. The stock fell 0.39% on Sunday before the results were released.

The company began consolidating the Turkish and South African businesses acquired for $2.56 billion this year through a 35% stake in Oger Telecom. Its earlier and first foreign ventures, in Asia and Kuwait, have yet to start making money.

Saud Al-Duweish, STC's chief executive, said in January the Oger Telecom purchase would boost profit by 4% and revenue by 30% in 2008.

STC lagged regional rivals in growth terms, having made its first foreign investment last year, taking a 25% stake in Malaysia's Maxis in a $3 billion deal that opened up markets in India and Indonesia.

Still, those operations have yet to start making profit, board member Abdul-Rahman Mazi said in January.

STC also secured 26% of Kuwait's third mobile phone company for $908 million in November. The Kuwait business has yet to start operations.

At home, STC has been losing ground to rival Etihad Etisalat (Mobily), which grew to a 40% market share by the end of 2007 from 30% a year earlier.

Oger Telecom owns 55% of fixed-line operator Turk Telekom and 75% of Cell C, South Africa's third-largest mobile operator. It offers internet services in Saudi Arabia, Lebanon and Jordan. Oger Telecom had 35 million users and revenues of $6.9 billion in 2006.

Its parent, Saudi Oger, is a construction company controlled by the family of late Lebanese prime minister Rafik Al-Hariri.

STC plans to pay a dividend of 1 riyal per share for the first quarter. (Reuters)

Follow us to get the most comprehensive technology news in UAE delivered fresh from our social media accounts on Facebook, Twitter, Youtube, and listen to our Weekly Podcast. Click here to sign up for our weekly newsletter on curated technology news in the Middle East and Worldwide.